In one of his last official acts, Gov Schwarzenegger has appointed David Crane to be the next UC regent. While Crane’s appointment has to be confirmed by the state senate, the senate has usually supported regents with a pro forma vote; however, this time things may be different. Although Crane is a Democrat, he has been one of Schwarzenegger’s biggest allies, and he has helped to lead the Terminator’s fight against public pensions and public employee unions. Moreover, Crane’s various investments show that he may have a strong conflict of interest in relation to the university’s own investment portfolio.
As a former Board member of CalSTRS, Crane argued that pensions often hide their true risk by predicting overly rosy investment returns. Crane has also called pensions “non-market” deals, and he has advocated for a new accounting measure that would make pension system’s declare a much higher liability by reducing their expected investment returns. In other words, he wants pensions to publicize a higher liability so governmental officials will have an easy time pushing for pension reform.
It should also be noted that Crane’s link to Schwarzenegger goes back to a very shady deal. According to Capital Weekly, while Crane was at the investment firm Babock & Brown, “Babcock brokered the governor's controversial jet-lease deal with Singapore Airlines, allowing the governor to defer paying taxes on millions in income.” In this nexus of high finance and corporate cronyism, we find the start of a strong relationship.
Once The Terminator was in office, he brought in Crane to help lead the governor’s economic team, and Crane returned Arnold’s earlier favor by engaging in his own questionable deals. According to the L.A. Times, “Babcock & Brown, the financial services firm where Crane worked for a quarter of a century, hired a Sacramento lobbyist last year to influence the governor's office on so-called public-private partnerships, records show. Since joining the governor's team in 2004, Crane has received hundreds of thousands of dollars of income from deals he made while at Babcock, a firm founded in San Francisco and based in Australia, according to financial disclosure reports.” In other words, Crane is a perfect candidate to be a regent because he has already established his credentials of abusing power and using a public institution to enrich himself.
Crane has also been a leader in privatizing public institutions through public-private construction deals. According to Calitics,
“Crane is claiming that he cannot possibly benefit financially from any future deals, but one wonders whether, even if Crane is telling the truth, it really matters. The network of friends and former business associates to which Crane's advice could directly or indirectly steer business is vast. This is how government-by-profit-taking typically works, rewarding friends and punishing enemies. Whether or not Crane gets his profit now, as an economic adviser, or later, when he returns to Babcock & Brown or some other destination, is in many ways besides the point, just a clever way to avoid violating the letter of the law.” Yes, like so many other regents that have come before him, Crane is set up to profit from his appointment as regent.
Luckily, there is already a movement coming out of a UCSB faculty group to block Crane’s appointment, and as the year progresses, we hope to organize the first senate rejection of a UC regent. It is time to end the attack on pensions, public employees, unions, and our state’s institutions, and opposing Crane’s nomination would be a first step in the stand against free market fundamentalism or what is otherwise know as crony capitalism.